PARIS // A pledge to stabilise markets from the world's leading economies seemed to stabilise western stocks yesterday, a day after fears over the global economy had sent shares sliding.
Finance ministers from the Group of 20 (G20) leading and emerging economies meeting in the US capital pledged to "take all necessary actions to preserve the stability of the banking systems and financial markets" and to make sure banks had the cash they need to pay their day-to-day expenses.
The G20 statement was not much - it mostly reiterated pledges made earlier - but the show of solidarity stemmed losses in Europe. Asian shares, however, continued to fall sharply, with South Korea's Kospi index posting a 5.73 per cent decline.
"The statement from the G20 last night may have taken the edge off the current bitter market sentiment but the reassurances from the finance ministers lack substance," said Jane Foley of Rabobank.
"Until politicians … [move] closer to a solution to the euro-zone debt crisis, markets will continue to worry about a messy and painful outcome."
In Europe, France's CAC-40 was down in early trading but rallied to post gains of 1.02 per cent, while the DAX in Germany rose 0.63 per cent to 5,196.
The FTSE index of leading British shares closed at 5,066, an increase of 0,50 per cent.
In New York, stocks were initially lower, but rose into the black in the afternoon. By mid-afternoon, though, indices had settled near where they began the day. The Dow Jones Industral Average had inched up by 0.09 per cent at 10,743 while the Standard & Poor's 500 was up 0.38 per cent to 1,133.
While worrying about the global economy following the US Federal Reserve's warning earlier this week that the US economy faced sizeable downside risks and a raft of downbeat European and Asian economic indicators, investors continue to keep a close watch on developments in Greece.
"The markets are eagerly awaiting a resolution or, at the minimum, a more rigid strategy to reduce Greece's debt liabilities," said Giles Watts, the head of equities at City Index.
Bank stocks have led the way down in recent days as investors fret over their potential exposure to the debts of Greece. Those fears have become more acute as the markets increasingly price in the likelihood of a Greek default.
Athens has had a series of meetings with its creditors this week to try to avoid that, but it's unclear whether it will be able to dig itself out of its debt hole, even with the help of billions from the EU and the IMF.
Those concerns have knocked confidence in the euro over the past week or two. After Thursday's plunge it was trading a little bit steadier, up 0.1 per cent at US$1.3478.
Jean-Pierre Jouyet, the head of the French market authority AMF, told France Inter radio, "The situation is very, very worrying. We are in a worldwide situation of crisis", he pointed to debt in Japan, "imbalances" in the US, and Europe's sovereign debt troubles.
Joaquin Almunia, who runs the department in the EU's executive commission that has to clear bank bailouts, suggested this week one of those measures may be to extend crisis rules that make it easier for governments to rescue failing lenders. He also said even banks that passed stress tests this summer may need to raise more money.
Amid these continuing concerns, benchmark oil fell 27 cents to $80.24.
Earlier in Asia, Hong Kong's Hang Seng fell 1.3 per cent to 17,668.80 after losing almost 5 per cent the day before. Australia's S&P/ASX 200 index fell 1.5 per cent to 3,903.20.
Mainland China's Shanghai Composite Index lost 0.4 per cent to 2,433.16. Japan's market was closed for a holiday.
* Associated Press
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
